Abra is one of the most highly-touted applications in the Bitcoin industry due to the company’s focus on making international remittances much more efficient. Although many companies are trying to sell themselves to investors as Bitcoin startups, Abra took the alternative approach of not mentioning Bitcoin at all during their Launch Festival 2015 presentation. Abra also ended up taking home the top prize at the event.
Although Abra does not feel the need to mention Bitcoin to their users, the company’s CEO, Bill Barhydt, recently let it be known that his product would be impossible without the P2P nature of the blockchain. Barhydt described the long process of developing Abra at Consensus 2015, and he explained that the P2P digital cash enabled by the Bitcoin network must be protected in order to enable more apps like Abra in the future.
Abra is Impossible Without Bitcoin’s P2P Cash
While explaining the importance of Bitcoin’s P2P model, Barhydt noted that the peer-to-peer digital cash system allows users and companies to avoid the usual regulatory burden associated with the transfer of funds:
“How do you facilitate a model that is Metcalfe’s Diagram of people who want to transact, but not Metcalfe’s Diagram of compliance complexity, which is what this could become if it’s not done right. The only way to solve that problem is to have no financial intermediary in terms of holding funds and no financial intermediary in terms of remitting funds or transacting funds — whether it’s person-to-person or person-to-merchant makes no difference. That’s why we believe that the only model for doing that is peer-to-peer using the blockchain.”
Unlike Western Union, Xoom, and other options for transferring money across borders, Abra does not hold any customer funds. All user funds are held on the blockchain, and the value tied to those assets are fixed to the US dollar via smart hedging contracts.
Other Protocols Would Not Work
Barhydt has had the basic of idea of an application that allows users to transfer cash to any other phone in the world for quite some time, and Abra looked into a variety of different options before settling on the Bitcoin blockchain. The Abra CEO explained that the liquidity of bitcoin was one of the attributes that made it the best option available to them:
“We looked at everything . . . We looked at not only [the] Bitcoin blockchain. We looked at Ripple, we looked at creating our own, we looked at sidechain models, and there was really only one way to do it because we needed a liquid currency that has a reasonably stable market cap — at least relative to where bitcoin is today.”
We Must Protect Bitcoin’s P2P Model
As a final note on the importance of the Bitcoin blockchain, Barhydt noted that everyone should be striving to support bitcoin as a currency. He explained that supporting bitcoin would allow further development of other P2P financial applications in the future:
“It’s the only way to do what we’re doing, so it is incumbent on all of us to make sure that we have that peer-to-peer model that’s stable and growing because you can’t have companies like Abra without it — whether the consumer knows that they’re using bitcoin or not. Whether they fully appreciate the difference between peer-to-peer versus Western Union or Bank of America or not, we need that infrastructure in place to enable this type of application.”
Abra plans to launch in the United States and the Philippines soon. The company recently received an investment from American Express.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.